Market news wrap

Charlie Aitken from Southern Cross Equities joins Lateline Business for a look at the day on the markets.

Transcript

WHITNEY FITZSIMMONS, PRESENTER: For his take on the impact of the Goldman Sachs case on the day's trade, I spoke earlier to Charlie Aitken at Southern Cross Equities.

Charlie Aitken, would you say the Goldman Sachs fraud charges in the US were an excuse for profit taking here, or does it go deeper than that?

CHARLIE AITKEN, SOUTHERN CROSS EQUITIES: Yes, firstly it was an excuse for profit taking. Remember, the markets are up sharply off the February lows. Everyone's sitting on a profit. It was a trigger for profit taking, but I think it requires a bit more thought.

This is more about regulatory oversight of principle trading - whether these powerful banks will be allowed to principle trade in the scale that they currently do going forward. And you can see that anything investment banks are big principle traders of, like commodities and currencies, were all under heavy pressure today.

So, yes, a little bit of profit taking, but the market was thinking more broadly about the ramifications of this.

WHITNEY FITZSIMMONS: So does that explain the switch to defensive stocks then?

There was a clear rotation in the market from cyclical and risky stocks to defensive stocks. And I'd probably expect that to continue for the next little while after the run that cyclical stocks have had recently.

WHITNEY FITZSIMMONS: And can you tell us what's behind the large volumes traded in takeover target Lihir Gold?

CHARLIE AITKEN: Well, there seems to be a growing rumour that some other predator might be interested in Lihir. The market rumour is Newmont. The turnovers in Lihir have been absolutely massive. I think about 25 per cent of the company's changed hands since the Newcrest offer was spurned.

It would make sense for someone else to get interested in Lihir. I think that could easily be right, that rumour, and I think Lihir shares are probably going higher.

WHITNEY FITZSIMMONS: And News Corporation is the best performer in the ASX100. How does that reconcile with Wall Street's weakened performance?

CHARLIE AITKEN: You very rarely see News Corp, which is seen as a US stock, up sharply when the Dow Jones is down, but the Dow was down 125 on Friday night and News Corp is up 1.6 per cent today. All comes down to the currency, Whitney. The Aussie dollar has been hit pretty hard today - 95.17 US cents - pretty much down 2 cents. News Corp - big US dollar earner - is outperforming due to the currency falling.